Last Independence Day, the One Big Beautiful Bill Act was signed into law, furthering many key priorities of the Trump administration. Tucked inside the multihundred-page bill was a short provision that, beginning in 2027, could have a significant impact on K-12 students, unofficially known as the Federal Tax Credit for Scholarships.
The FTCS will provide taxpayers with a nonrefundable federal income tax credit of up to $1,700 per year for qualified donations to scholarship-granting organizations, or SGOs. Donations to SGOs will fund scholarships distributed to students in grades K-12 to help cover expenses such as tuition, tutoring, therapies, books, supplies, internet access, and more. All children whose families do not exceed a generous income cap are eligible — children in public schools as well as privately educated children. For states that opt into the program, the benefits are undeniable, as it costs them nothing.
Gov. Jared Polis (D-CO) even said opting in is a “no-brainer,” going so far as to say, “I would be crazy not to.” It is little wonder, then, that 29 governors and counting have filed with the IRS for their states to participate in the program beginning Jan. 1, 2027.
Still, the question of how the federal program will interact with existing choice programs has largely gone unexamined.
To date, there are 75 choice programs across 34 states serving over 1.5 million students. If school choice were a stand-alone district, it would be nearly twice the size of New York City Public Schools, the largest district in the country. Yet, some are concerned that the federal program will mean more regulations for these choice programs, or believe parents can only choose from one available program.
This is not the case. The federal program is not a competitor to state choice programs. Rather, it complements them by adding to the total scholarship funding available to families.
The FTCS could strengthen choice programs that have struggled to reach launch capacity by increasing awareness among families whose educational preferences were out of reach and out of mind. Currently, 17 states have state-based tax-credit scholarship programs similar to the new FTCS. However, if you asked parents whether they were aware of their state’s choice program, you would have about a 50/50 shot of getting the right answer. In states with education savings accounts, only about 30% of parents know a program exists.
Parents who learn about the FTCS from their accountant or hear a story about their governor opting in are taking a first step toward discovering other state-level choice programs.
Take Virginia as an example. Since 2012, the Commonwealth has operated the Education Improvement Scholarships Tax Credits program, providing a 65% state tax credit to individuals and businesses that donate to approved scholarship foundations. These foundations then award scholarships to about 5,000 eligible low- and moderate-income students attending participating private schools annually.
The Virginia program’s average scholarship amount and enrollment are relatively low compared to other choice programs. Moreover, funding increases have been persona non grata in Richmond over the last few years. Meanwhile, the program is scheduled to sunset Jan. 1, 2028, after the first year of the FTCS. This January, under former Republican Gov. Glenn Youngkin, Virginia became the first state to opt into the FTCS, submitting an initial list of approved Scholarship Granting Organizations to the Treasury. The demand was so high that Youngkin followed up with another list of SGOs who asked to be involved just before he left office. Families realize their access to scholarship funding is at risk, and they do not want to lose it.
The FTCS can provide greater awareness, funding, and scholarship dollars for the millions of parents using choice programs and those who still do not know what options are available to them.
FROM PROMISE TO REALITY: SCHOOL CHOICE WON BIG IN 2025
It makes sense, then, why recent EdChoice polling shows 72% of school parents support the FTCS program. Parents recognize the benefits of the FTCS, especially for states with existing choice programs.
Now it’s up to governors to opt in. If they do, educational opportunity will be strengthened, and their state will be one step closer to ensuring all have access to an education that best fits their needs.
Cooper Conway is a state policy director at EdChoice, a 501(c)(3) nonprofit, nonpartisan organization working to advance educational freedom and choice for all students as a pathway to successful lives and a stronger society. Follow him on X @CooperConway1.